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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (105130)	6/30/2000 4:02:27 PM
From: Road Walker	Respond to of 186894

Friday June 30, 1:16 pm Eastern Time Forbes.com PC Chip Wars: Good News, Bad News By Lisa DiCarlo The semiconductor supply situation appears to be easing up now, but early 2001 brings ``great uncertainty and risk.'' Those are the findings of analysts from SG Cowen and Co., which spent this week investigating fabrication facilities in Taiwan, where a lot of the world's chips are made. The good news: Circuit board makers report that chip supply from Intel (Nasdaq: INTC - news) has gotten considerably better in the past month. In fact, because Intel and Advanced Micro Devices (Nasdaq: AMD - news) have been boosting capacity, and circuit board companies have been building up inventories, analyst Drew Peck says a chip price war is inevitable late this year. That's great news for PC bargain-hunters, but it can be bad news for the chip and PC companies adjusting to ever-smaller profit margins. Cowen hasn't changed its price targets or estimates for either company but said in a research note they view Intel and AMD as ``short-term opportunities at best--based strictly on seasonal demand.'' Cowen says Intel will lose big market share in chipsets to Via Technologies, a Taiwanese company that acquired the assets of chipmakers Cyrix and Centaur last year. Four major Taiwanese circuit board makers say they will probably buy 60% of their chipsets from Via by the end of the year, up from about 30% to 40% earlier this year. Intel doesn't break out specifics but says its chipset shipments were down in the first quarter 2000. A chipset is a set of companion chips that works with the main microprocessor, such as a Pentium. Why is the outlook on Via so bullish? In part because it bought usable in-process technology from Cyrix and Centaur. But they've also been able to capitalize on Intel's blunders in this space. Intel has made mistake after mistake in chipsets including performance problems, bugs and late products. ``The chipset debacle continues to plague Intel,'' writes Peck in the report. The upshot is that the second half 2000 rebound predicted by most PC makers is on track. A Cowen analyst today reiterated the firm's buy rating on Compaq Computer (Nasdaq: CPQ - news), which historically has had trouble maintaining low inventory levels. Analyst Richard Chu says there is ``little downside risk'' with the company and adds that its commercial PC business has a chance to break even in the second quarter. IBM (NYSE: IBM - news), too, says it expects its PC business to record a profit this year. But as anyone who follows the PC and component industry knows, it's a cyclical market with dramatic highs and lows. While the second half of this year promises to be healthy, it's questionable whether problems brought on by a chip price war and rising inventory levels will surface in early 2001. ``The wild card...is the economic outlook,'' writes Peck. ``Any weakness could result in a sharp reversal of fortune for PC component makers by December or January.'' Go to www.forbes.com to see all of our latest stories.